Why many retirees use more than one income source 

Retirement income can feel confusing, especially when it’s your turn to make sense of it. How much should come from super? Where does the Government Age Pension fit? And what happens if your needs change over time?

That uncertainty is more common than you might think. AMP research shows only half of Australians feel financially confident about retirement, and more than one in three people aged 65 and over still feel financially insecure, worried their savings won’t last.¹

One of the biggest reasons for the confusion can be that retirement income rarely comes from a single source. For most people, it’s a mix – and understanding why that mix exists is what makes everything else start to click.

AMP Super's Senior Product Manager Brooke Veenstra explains it simply: "It's not about choosing one or the other – it's about getting the balance right. Having some money that's flexible and some that's built to last can give you the best of both worlds: freedom to enjoy retirement now, with the confidence that you'll still have income later on." 

Why do most retirees use more than one income source?

Because different retirement income options are designed to do different things.

Some provide flexibility, giving you access to your money (including lump sums) when you need it. Others focus on providing greater certainty, with income designed to continue for life. There's also the Government Age Pension, which can provide additional support alongside your own savings depending on your eligibility.

We’re all living a lot longer, according to the Australian Government Actuary (AGA), Australia’s life expectancy is to around age 92, and many of us are living well beyond this. In fact, one in five Australians live past the age of 95.²

That means you could be spending 20-30 years or more in retirement and with spending needs changing along the way, it's a big ask for any single income source to provide flexibility, long-term certainty and ongoing support all at once.

"Whether it’s your super, investments, the Age Pension or even part-time work, having a mix helps balance things out," says Brooke. "It means money can come from different places, so even when markets move these can help you feel more confident your savings will last."

What do different retirement income streams look like in practice?

Many retirees think about their income in layers, with each source playing a different role. 

Layer 1: Covering everyday essentials

These are the expenses that don't stop when you retire – things like groceries, utility bills, insurance and housing costs.

Many retirees like the certainty of knowing these costs will be covered regardless of market movements or how long they live.

This is where a lifetime retirement income stream can provide more certainty, because it continues for life. 

"A lifetime retirement income stream is designed to provide a regular income for life, no matter how long you live," explains Brooke. "While you give up some flexibility – like accessing lump sums or choosing how it’s invested. For many people, it can provide real peace of mind, knowing their income won’t run out."

Layer 2: Funding lifestyle and flexibility

Retirement isn't just about paying the bills. It's also about having the freedom to travel, pursue hobbies, help family members or cover unexpected costs.

These expenses tend to change from year to year, so many retirees prefer income that gives them more control and can access it with more flexibility. 

This is where a flexible retirement income stream (also known as an account-based pension or allocated pension) is often used, allowing retirees to adjust how much they withdraw over time (subject to minimum drawdown requirements set by the Government).

"Flexible retirement income gives you the freedom to access your super when you need it, with control over how it’s invested," says Brooke. "You can draw a regular income or take out chunks when you need it, say for a holiday, helping the kids out, or covering unexpected expenses."

Layer 3: Government support

For many Australians over 67, the Government Age Pension forms part of their overall retirement income. In fact, at March 2025, the Australian Institute of Health and Welfare reported that 2.7 million Australians of retirement age were receiving the Age Pension.   

To qualify for the Age Pension, you generally need to meet three key requirements: you must be at least 67 years old, you must meet Australian residency rules and your income and assets must fall within the applicable thresholds.

The means tests are designed to scale Government support as your personal wealth changes, so just because you don’t qualify today doesn’t mean you can’t qualify down the track.

Layer 4: Additional income 

Some retirees also draw on income or assets outside their super, such as savings, investments or even part-time work. 

These sources can provide extra flexibility or act as a buffer for unexpected expenses, depending on your circumstances. Some income outside of super – like savings, investments or part-time work – is likely to be taxed differently, often at your personal tax rate, unlike retirement income streams in your super.

Where does lifetime retirement income fit?

A lifetime retirement income stream is designed to address one of the biggest concerns many retirees have – running out of money later in life.

Unlike a flexible retirement income stream, which relies on an account balance that is gradually drawn down over time, a lifetime retirement income stream continues paying you an income for as long as you live.

This can provide peace of mind for retirees who are concerned they might outlive their savings.

It may also help improve Age Pension eligibility. Lifetime retirement income streams receive special concessional treatment under the Age Pension assets test, which can result in an increase to the amount of Age Pension you may receive.

Rather than replacing other income sources, many retirees use lifetime income alongside them – combining the certainty of income for life with the flexibility to access money when they need it.

What should I do next?

If you're feeling overwhelmed, know that it's totally normal. "Most people don't wake up one day and suddenly know exactly what their plan for retirement will be!" says Brooke. The first step? "Make it less overwhelming, break it up into bite size chunks, and ask for help."

A few practical next steps include:

• estimating how much income you'll need in retirement

• seeing if a transition to retirement (TTR) income is right for you

• understanding where your income could come from, including super, the Age Pension and other savings
  

• exploring different retirement income options and how they work together

• learning the tax benefits of putting your super into a retirement income stream

• seeing how your super remains invested, even in retirement

Paying for personal financial advice can feel like an out-of-reach expense for many. For AMP Super members who want personal guidance and advice, AMP Super’s Digital Financial Advice is available for no extra fees. It can help you understand where you stand, provide recommendations on the best mix between lifetime and flexible retirement income streams and explore possible next steps. And if you'd rather speak with someone directly, you can book a chat with one of our intrafund advisors and get guidance tailored to your needs, also with no extra fees.

"When you start understanding even a small bit of how things work and what’s available to you, it’s less complicated,” says Brooke. “The more you learn, you’ll start to realise how easy it is to create a resilient retirement for yourself.”